Vodafone 2015 Annual Report Download - page 136

12. Investments in associates and joint arrangements
We hold interests in several associates where we have signicant inuence, with the most signicant being
Safaricom Limited following the disposal of Verizon Wireless on 21 February 2014, as well as interests in a number
of joint arrangements where we share control with one or more third parties. For further details see “Critical
accounting judgements” innote 1 “Basis of preparation” to the consolidated nancial statements.
Accounting policies
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint
control; that is, when the relevant activities that signicantly affect the investee’s returns require the unanimous consent of the parties sharing
control. Joint arrangements are either joint operations or joint ventures.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the rights to the assets, and obligations for the liabilities,
relating to the arrangement or that other facts and circumstances indicate that this is the case. The Group’s share of assets, liabilities, revenue,
expenses and cash ows are combined with the equivalent items in the nancial statements on a line-by-line basis.
Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is accounted for in accordance with the Group’s accounting
policy for goodwill arising on the acquisition of a subsidiary.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control have the rights to the net assets of the arrangement.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identiable assets, liabilities and
contingent liabilities of the joint venture is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of joint ventures are incorporated in the consolidated nancial statements using the equity method
of accounting. Under the equity method, investments in joint ventures are carried in the consolidated statement of nancial position at cost
as adjusted for post-acquisition changes in the Group’s share of the net assets ofthe joint venture, less any impairment in the value of the
investment. The Group’s share of post-tax prots or losses are recognised in the consolidated income statement. Losses of a joint venture in excess
of the Group’s interest in that joint venture are recognised only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the joint venture.
Associates
An associate is an entity over which the Group has signicant inuence and that is neither a subsidiary nor an interest in a joint venture.
Signicant inuence is the power to participate in the nancial and operating policy decisions of the investee but do not have control or joint control
over those policies.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identiable assets, liabilities and
contingent liabilities of the associate is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of associates are incorporated in the consolidated nancial statements using the equity method of accounting.
Under the equity method, investments in associates are carried in the consolidated statement of nancial position at cost as adjusted for post-
acquisition changes in the Group’s share of the net assets ofthe associate, less any impairment in the value of the investment. The Group’s share
of post-tax prots or losses are recognised in the consolidated income statement. Losses of an associate in excess of the Group’s interest
in that associate are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the associate.
Joint operations
The Company’s principal joint operation has share capital consisting solely of ordinary shares and is indirectly held, and principally operates in the
UK. The nancial and operating activities of the operation are jointly controlled by the participating shareholders and are primarily designed for all
but an insignicant amount of the output to be consumed by the shareholders.
Name of joint operation Principal activity
Countr y of
incorporation or
registration
Percentage1
shareholdings
Cornerstone Telecommunications Infrastructure Limited Network infrastructure UK 50.0
Note:
1 Effective ownership percentages of Vodafone Group Plc at 31 March 2015, rounded to the nearest tenth of one percent.
Notes to the consolidated nancial statements (continued)
Vodafone Group Plc
Annual Report 2015
134